CFTC Subpoenas Leading Exchanges for Trading Data

According to anonymous sources cited by The Wall Street Journal, The United States Commodity Futures Trading Commission (CFTC) is coordinating with the U.S. Justice Department in conducting investigations into price manipulation in the spot BTC markets. The report claims that the CFTC launched a criminal probe into BTC price manipulation after several cryptocurrency exchanges rejected a request from Chicago Mercantile Exchange (CME) for the exchanges to share trading data CME.

Last month, it was reported that the U.S Justice Department had launched a criminal probe into whether the bitcoin and cryptocurrency markets the subject of manipulation and misconduct, citing “four people familiar with the matter.”

According to a report recently published by The Wall Street Journal, again citing “people familiar with the matter,” the CFTC has “open[ed] an investigation into whether traders have colluded to manipulate bitcoin prices.

The report adds that “The CFTC is coordinating with the U.S Justice Department” in its investigations.

CFTC Investigation Spurred by Lack of Trading Data Provided to CME by Exchanges

The Wall Street Journal claims that the CFTC’s investigation was spurred by a lack of responsiveness to requests from CME that Bitstamp, Coinbase, Itbit, and Kraken to provide trading data back in January. In response to the requests, several exchanges reportedly initially “declined to comply,” before “provid[ing] some data” after CME reduced the request to just several hours of trading activity, rather than a full day. The report adds that the data provided only included information “restricted to “a few market participants.”

The CFTC, the regulatory authority tasked with overseeing CME’s bitcoin futures markets, reportedly subpoenaed the exchanges for the data in response to the dispute. The report describes the “fight over access to bitcoin trading data” as having comprised a significant factor in the CFTC’s decision to launch an investigation into price manipulation in the BTC markets.

The investigation is legitimated by bitcoin’s designation as a commodity, juridically granting the CFTC jurisdiction over the commodity markets underscoring derivative markets overseen by the regulator. CME spokeswoman, Laurie Bischel, stated: “All participating exchanges are required to share information, including cooperation with inquiries and investigations.”

Jesse Powell, the chief executive officer of Kraken, has criticised the subpoena, stating that the “newly declared oversight” of the CFTC “has the spot exchanges questioning the value and cost of their index participation.” Charles Cascarilla, the chief executive officer of Paxos, the company that operates Itbit, stated: “We have definitely entered an unknown area where it is clear there is a desire for tightened oversight.” As of this writing, Bitstamp and Coinbase are yet to address the alleged subpoenas.

What is your response to the investigations into BTC price manipulation? Share your thoughts in the comments section below!

Images courtesy of Shuttestock, CME Group

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